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The two tech titans have engaged this week in a few more rounds in the War of Productivity Apps -- and one cooperative dance. First, the dance: Microsoft is rolling out Google Chat integration on its webmail service, Outlook.com.

In a posting on the Office blog, Microsoft's Douglas Pearce wrote that the company "heard some of you who switched over from Gmail still want to chat with friends stuck on Gmail." Currently, Outlook.com users are able to chat with Facebook and Skype contacts.

Meanwhile, back on the war front, the City of Boston announced last week that it was adopting Google Apps for all of its city workers and schools. The City said Apps will be used instead of "multiple aging on-premises email systems currently in use," which at least some observers took to mean Microsoft's Exchange Server.

Apps Versus 365

Boston noted that government agencies in LA, Pittsburgh, St. Louis, and the states of Colorado, Maryland, Oregon, Rhode Island, Utah and Wyoming have also moved to Google Apps. Microsoft, in response, issued a statement that the "citizens of Boston deserve cloud productivity tools that protect their security and privacy," and added that "Google's investments in these areas are inadequate."

Possibly in response to the Boston loss, Microsoft issued a press release Monday about the businesses that have chosen its Office 365 over Google Apps, as it attempts to emphasize 365's credentials over Google Apps'. Microsoft announced several organizations that have recently adopted Microsoft Office 365 "after having deployed or piloted Google Apps," including Sensia Halsovard AB, SEPCOIII, and Arysta LifeScience.

The Redmond, Washington-based company also noted the adoption in recent months by several other major organizations, including Caltex Australia, FHI 360 and Santa Clara County, and pointed out that some of its customers are subject to such regulatory requirements as HIPAA.

'Familiarity of Office'

Michael Atalla, director of product marketing for Office 365, said in a statement that businesses "can't afford to compromise on a service that was retrofitted for the enterprise," an obvious dig at Google Apps' readiness for large organizations. He added that 365 provides "the familiarity of Office" with capabilities businesses need, in a trusted cloud service.

Microsoft is also engaged in a substantial ad war to convince users that Google Apps are just too risky. The ads feature Rob Schneider, formerly of Saturday Night Live, and baseball's Pete Rose, whose gambling habit is used in the campaign. A key theme: Google Apps cannot accommodate Office documents' formatting, and is therefore risky. The campaign is backed up by postings on the company's Office blog.

Ironically, the video ads are being featured on YouTube, which is owned by Google.

Meanwhile, Microsoft could be facing incoming fire on Office from another source: Apple. Reports in the San Francisco Chronicle and elsewhere indicate Apple has been hiring quality assurance engineers, as it gets close to releasing a major revision to its iWork suite for the iPad, a platform for which there is no Office.